US seeks talks to avert trade war with Brazil

BRASILIA, March 9, 2010 (AFP) -Visiting US Commerce Secretary Gary Locke said Tuesday 9 March that Washington was seeking talks with Brazil before it imposes retaliatory trade tariffs for US cotton subsidies the WTO ruled as discriminatory.

After meeting with Brazilian Foreign Trade Minister Miguel Jorge and cabinet chief Dilma Rousseff, Locke said US President Barack Obama's administration would launch negotiations with Brazil shortly.

Jorge said neither Washington or Brasilia wanted a trade war and that Brazil was "ready to negotiate."

Neither official confirmed any upcoming trade talks and provided no further details of the effort.

Brazil on Monday 8 March announced it would raise tariffs on 591 million dollars worth of US products in the latest twist in its showdown over US cotton subsidies it has blasted as unfair.

The list of 102 products included luxury consumer items such as cosmetics, televisions and cars.

The World Trade Organization, which ruled in June 2008 that subsidies to US cotton producers were discriminatory, has allowed Brazil to impose up to 829.3 million dollars in retaliatory sanctions against US products.

The authorized sanctions include 238 million dollars' worth of US intellectual property and services.

The punitive tariffs, which under WTO rules can be imposed until the offending party brings its trade regime under international rules, will go into effect in 30 days unless the two nations find a way of averting a costly trade war.

After the meeting, Jorge told reporters that Brazil "is hoping for negotiations... but that has to come from them," meaning the United States should take the first step.

The Brazilian official said "no proposals" came of his meeting with Locke, "because it was not a meeting about negotiations," adding that the trade dispute was now being handled by the foreign ministries of both countries.

He said that during the meeting it emerged the United States was not interested in a trade war with Brazil.

"Brazil is also not interested in a trade war. Nobody is. We're ready to negotiate," Jorge said.

In Washington, a US lawmaker warned Tuesday 9 March that the United States could be on the losing end in a trade war with Brazil.

"You would be shocked at how much international support Brazil has. I think if you were to go in that direction, Brazil would have a lot of friends," said Republican Senator Mike Johanns.

"Get ready, they're going to pick the most sensitive areas they can possibly pick, target those for retaliation," said Johanns, who underlined that "Brazil is not standing alone on this issue."

And "they have gotten to a point, now, where they've won every stage and step in this WTO process," said Johanns, who served as agriculture secretary under former president George W. Bush.

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